MARKET WATCH: Oil prices fall; Saudi Arabia reduces exports in response

Crude oil prices dropped to settle under $50/bbl on the New York market on Aug. 7 while Brent crude oil prices also dropped on the London market to hover above $52/bbl.

Crude oil prices dropped to settle under $50/bbl on the New York market on Aug. 7 while Brent crude oil prices also dropped on the London market to hover above $52/bbl.

The Wall Street Journal reported US light, sweet oil futures have risen 16% since falling into bear market territory during June. Prices exceeded $50/bbl for the first time in 2 months in July, but have been unable to hold above that level given ample world oil supplies.

Meanwhile, Saudi Aramco plans to reduce crude oil allocations to its customers worldwide in September by at least 520,000 b/d, Reuters reported. Saudi Arabia reportedly will cut supplies to most Asian buyers by as much as 10% next month, multiple sources have told Reuters.

PVM oil analyst Stephen Brennock told CNBC on Aug. 8 that even though Saudi Arabia’s self-imposed cut to crude oil allocations “helps to lift sentiment in the short term, there’s no guarantee of long-term price support as other oil exporters including Russia, the US, and Iran rush to fill the shortfall.”

Ole Hansen, head of commodity strategy at Saxo Bank, said, “Clearly, Saudi Arabia is showing everybody that they are willing to be at the forefront of supporting oil prices.”

Energy prices

The September light, sweet crude contract on the New York Mercantile Exchange decreased 19¢ on Aug. 7 to settle at $49.38/bbl. The October contract fell 16¢ to close at $49.57/bbl.

The NYMEX natural gas price for September delivery gained 2.7¢ to $2.80/MMbtu. The Henry Hub cash gas price fell 1¢ to $2.75/MMbtu.

Heating oil for September was down less than a penny to a rounded $1.64/gal. Reformulated gasoline stock for oxygenate blending for September declined 1.6¢ to a rounded $1.64/gal.

The Brent crude contract for October on London’s ICE decreased 5¢ to $52.37/bbl. The November contract was down 4¢ to $52.42/bbl.

The August gas oil contract fell $10 to $478.50/tonne.

The Organization of Petroleum Exporting Countries’ basket of crudes on Aug. 7 was $50.64/bbl, up 10¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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